Fraser & Neave Holdings Bhd CEO Lim Yew Hoe.
SHAH ALAM: Fraser & Neave Holdings Bhd
(F&N) expects the company’s first batch of cows to only arrive in six to 12 months following the cancellation of the permit to import 2,500 US-bred cows by the government as a precautionary move following an outbreak of avian flu.
F&N’s chief executive officer Lim Yew Hoe said in a briefing to analysts and the media yesterday that the company’s plans to diversify into the production of fresh milk will not be deterred as it would continue to develop the 2,726ha of land in Gemas, Negri Sembilan into an integrated dairy farm.
F&N has spent RM1.4bil of the RM2bil allocated for the first phase of the project.
The second phase would involve a further RM1bil in spending. The company plans to produce up to 200 million litres of milk annually from 20,000 cows as well as produce beef, and corn for animal feed, as part of its diversification when the farm becomes fully operational.
The company expects to produce up to 100 million litres of milk from the first phase.
Lim admitted that there would be a delay in the completion of the integrated dairy farm as the second phase would not be developed until the completion of the first phase.
He said the company would look into the matter of higher dividend payouts given that the delay of the second phase meant lower spending on the farm and higher than expected cashflow.
F&N declared a total of 63 sen per share in dividends for its financial year ended Sept 30, 2024 (FY24), after declaring a final single tier dividend of 33 sen per share and an interim dividend of 30 sen per share on Nov 5. For FY23, the company declared a total of 77 sen per share in dividends.
Lim said the company has backup plans for livestock from other sources, but the first batch will take anything from six to 12 months to arrive, with the delay of up to a year due to choppy sea conditions and soaring temperatures from April to September in this part of the world that can badly affect the cows.
He said the company was looking into alternative sources from which to import the cows, and that the cows must have the genomic traits that the cows the company ordered from the US have.
The company would also continue to liaise with the government over the matter of future contagion events and how to mitigate the risks.
The company would continue to develop the first phase of the integrated dairy farm and also start the planting of corn for animal feed in December, which should be ready for harvesting next April.
The cows should have animal feed ready for consumption by July, which Lim said would help lower the farm’s operating costs.
He also said that from the 100 million litres of milk expected to be produced from the first phase, up to 20 million litres would be supplied to F&N’s plant in the Suvannaphum Special Economic Zone in Cambodia and another 10 million litres to 15 million litres to Singapore as bulk supply to be packed in the company’s Tuas plant. The remainder would go towards domestic consumption.
On the matter of the excise duty on sugar-sweetened beverages, which would be increased to 90 sen per litre from 40 sen per litre, next year for beverages containing more than five grammes of sugar per 100ml announced under Budget 2025, Lim said the impact would be minimal and the company would try to absorb the cost.
The range of products that cross the sugar threshold contributes less than 1% in terms of sales and include the energy drink Ranger, F&N Teh Tarik and Magnolia Sterilised Milk.
Lim said the company would be looking into how to improve recipes and formulas to lower the sugar volume.
